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Richard Russell - Graveyard of Fiat Money
In Richard Russell’s commentary this week, the Godfather of newsletter writers discusses a decade of losses, fiat money being put to the test, ending an era of frivolity and real money (gold). In a time of great uncertainty, sometimes it is a good idea to turn to those with decades of market experience. As usual Russell kept his eye on the big picture. Here are a few snippets from this week’s commentary...
September 10, 2010
Richard Russell:
What was the stock market telling us by handing us a decade of losses? The answer is that the stock market was telling us that the era of frivolity and good times in the US had come to an end. Something very fundamental had changed.
...To wipe out 10 years of stock gains is a most unusual feat. I think it means the end of equities as the magic and guaranteed road to riches. It's the end of Warren Buffet's thesis that you should "buy good stocks and hold 'em forever." What this means is that Americans can no longer be certain of their retirement. It means the end of the time-honored American dream that "My kids will have a better life than I had."
It may also herald the end of America's leadership on the world's stage. America will be just a republic as the Founding Fathers wanted it to be -- not an empire.
...In the big picture, I believe we're going to put fiat money to the test. Fiat money allowed the US to experience boom. Fiat money produced the tech bust, the equities bust and the housing bust. Fiat money is the vehicle that is created and sponsored by the world's central banks. Fiat money will prove to be a fraud. Out of the graveyard of fiat money will emerge real intrinsic money -- gold. But gold's time has not yet come.
The gold bull market is a very strange bull market. It's a bull market that has progressed without the participation of the US public. That will change. When it comes, we will finally experience the speculative third phase of the gold bull market.
...The more I see of Obama, Summers and Geithner, the more I want to have all my money in gold. The Washington establishment is a menace to this nation. Don't bother fighting them, just protect yourself. Remember, you can still swap fiat junk for real money.
Richard Russell has been writing about the markets for 52 years. For some time he has warned his subscribers to protect themselves against the fraud of paper money by owning gold, I hope they have listened.
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Eric King
